PRETORIA – Spear Reit, the only regionally specialised real estate investment trust (Reit) listed on the JSE, plans to significantly increase its exposure to the residential rental market.
Residential comprises only 2.12 percent of the gross lettable area of Spear Reit’s total portfolio, but its stated intention was to increase this to 15 percent of gross lettable area and 12 percent of portfolio value in the medium term.
Quintin Rossi, the chief executive of Spear Reit, said yesterday that the trust planned to develop about 200 residential units at Sable Square and 200 residential units at Paarden Eiland as part of its mixed-use development plans for the two assets.
Rossi said the company should receive its planning approval in the next few months for Sable Square where, in the first phase, they would develop 100 residential rental units at a cost of between R200 million and R220m.
He said construction of these units would probably commence in the first quarter of next year and be completed by the end of the year.
Rossi said the timing of the development of the further about 100 residential rental units in the second phase was dependent on market demand.
He said the Paarden Eiland scheme involved the development of 200 residential units, a limited service hotel, about 10 000m² of offices and 9 000m² of convenience retail at a cost of about R1.4 billon.
Rossi said there was probably a two-and-a-half-year time horizon before they broke ground on the Paarden Eiland scheme because of town planning approvals and the rezoning of the site.
He said the completion of these residential units would probably result in the gross lettable area of the industrial assets in the total portfolio dropping from 51 percent to about 45 percent, retail increasing to about 15 percent, commercial declining to about 27 percent and residential rising to about 8 percent.
Shares in Spear Reit rose 4.26 percent on the JSE on Thursday to close at R9.80.